1
EXHIBIT 4
SAFEWAY INC. THE VONS COMPANIES, INC.
0000 Xxxxxxxxxx Xxxx Xxxx 000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000 Xxxxxxx, XX 00000-6300
Xxxxxxx Xxxxxxxxx Xxxx XxXxxx
(000) 000-0000 (000) 000-0000
December 16, 1996
SAFEWAY AND VONS ANNOUNCE MERGER AGREEMENT
Transaction Will Create North America's Second Largest
Grocery Store Chain With 1,377 Stores
Safeway Inc. (SWY) and The Vons Companies, Inc. (VON) jointly announced
that they have signed a definitive agreement for a business combination of the
two companies in a transaction in which Safeway will issue 1.425 shares of
Safeway common stock for each share of Vons common stock that Safeway does not
currently own. Safeway currently owns approximately 35% of Vons. The business
combination will be accounted for as a purchase, and the exchange will not be
taxable for Vons shareholders. The transaction was unanimously approved by a
special committee of the Vons Board of Directors, comprised of directors who
are unaffiliated with Safeway. The combined company will be the second largest
grocery store chain in North America, with 1,377 stores and sales in excess of
$22 billion.
To enhance the value of the transaction to all Vons and Safeway
shareholders, Safeway has agreed to purchase from partnerships controlled by
affiliates of Kohlberg Kravis Xxxxxxx & Co. 15 million shares of Safeway common
stock. The price per share for this repurchase will equal the market price per
share as determined by the volume weighted average trading price on the New
York Stock Exchange for the 10 consecutive trading days beginning on the
twentieth trading day prior to the date of the Vons shareholder meeting to vote
on the transaction, but not less than $38.375 per share, which was the closing
price on Friday, December 13. The shares will be purchased immediately
following the completion of the Vons merger. Safeway presently contemplates
financing the repurchase with bank borrowings. A special committee of
Safeway's Board of Directors, comprised of directors who are unaffiliated with
KKR, has approved the terms of the repurchase. The partnerships controlled by
the affiliates of KKR currently own approximately 49% of the outstanding shares
of Safeway common stock and will own approximately 38% of Safeway's outstanding
shares following the merger.
2
"Following discussions with Vons and after receiving updated information
regarding Vons performance and its prospects, we agreed to increase the
exchange ratio to 1.425 shares of Safeway stock for each share of Vons stock
not currently owned by Safeway," said Xxxxx Xxxx, President and CEO of Safeway
Inc. "The repurchase of Safeway common stock will make the transaction with
Vons more attractive than our earlier proposal for both the shareholders of
Safeway and Vons. We believe the repurchase will significantly improve the
earnings per share generated from the combination in 1998 and beyond, while
maintaining healthy interest coverage."
As an established leader in food retailing, Safeway's multi-regional
experience and financial strength will ensure that Vons continues to maintain
and grow its preeminent position in the Southern California marketplace," said
Xxxxxxxx X. Xxx Xxxxx, Chairman and Chief Executive Officer of The Vons
Companies.
"The stores will be operated under the Vons and Pavilions banners. Our
customers can expect the same high level of service delivered by the same
associates. Moreover, with the benefit of Safeway's size and buying power,
customers are assured they will continue to receive the value they have come to
expect from the Vons operations," added Del Santo.
Xxxxx X. Xxxxxx, Xx., a general partner of KKR Associates, said, "We are
pleased to have been able to respond to the request that affiliates of KKR sell
some of their shares back to Safeway in order to increase the long-term value
of the transaction to shareholders. We are equally pleased that we will
continue to have a major ongoing investment in Safeway valued at over $3.6
billion. The combined company makes excellent strategic sense and will be well
positioned to realize its continued growth potential."
Completion of the merger is subject to approval by the holders of a
majority of Vons outstanding shares, other than shares owned by Safeway,
expiration of the applicable waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act, and is expected to close early in the second
quarter of 1997.
Vons is one of the largest supermarket operators in Southern California.
The Company operates 325 stores under the names of Vons and Pavilions. The
Company's common stock is traded on the New York Stock Exchange under the
symbol VON.
Safeway Inc. is one of the world's largest food retailers, operating 1,052
stores in the United States and Canada. The Company's common stock is traded
on the New York Stock Exchange and the Pacific Stock Exchange under the symbol
SWY.
***
The Vons Companies, Inc. today also announced preliminary projected
results for the fourth quarter of 1996. Net income in the fourth quarter of
1996 is estimated to be approximately $.73 to $.78 per share, compared with
$.48 per share in the year ago quarter. This represents a full year earnings
per share estimate of $2.29 to $2.34 for 1996, compared with earnings per share
of $1.55 in 1995.
***
3
This press release is not an offer to sell or the solicitation of an offer
to buy securities of Safeway or Vons, and no such offer, solicitation or sale
will be made except in compliance with applicable securities laws.
Except for historical facts, all matters discussed in this release which
are forward looking involve risks and uncertainties. Potential risks and
uncertainties include, but are not limited to, competitive pressures from other
major supermarket operators and economic conditions in the companies' primary
markets. Reference is made to the Securities and Exchange Commission filings
of Safeway and Vons for additional information regarding potential risks and
uncertainties.
